Complainant

Respondent

Parties

Mark  McHugh

Gecko Operating Limited

Complainant

Respondent

Anonymised Parties

Representatives

Mr. David Montgomery, Thomas Montgomery & Son Solicitors

 Self-Represented

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00038728-001

15/07/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00041552-001

15/12/2020

The Complainant commenced employment with the Respondent on 1st February 2017. The Complainant was a permanent, full-time member of staff, in receipt of the monthly salary of €5,833.33. At all times the Complainant’s role was described as an “IT Specialist”. The Complainant’s employment was terminated on 15th June 2020 by reason of redundancy.

On 15th July 2020 the Complainant lodged a complaint under the Unfair Dismissals Act with the Commission. Herein, he alleged that he was dismissed under the guise of a “sham redundancy”. He further submitted that the dismissal was procedurally unfair. In denying this allegation, the Respondent submitted that the company was facing genuine redundancy situation and the process utilised to affect the same respected of the Complainant’s natural and contractual rights. On 15th December 2020 the Complainant lodged a further complaint under the Organisation of Working Time Act with the Commission. Herein he alleged that he did not receive payment of outstanding holiday entitlement on the termination of his employment.

A hearing in relation to this matter was convened and finalised on 18th October 2021. This hearing was conducted by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 and SI 359/20206, which designates the WRC as a body empowered to hold remote hearings. No technical issues were experienced by either side during the hearing. No issues as to my jurisdiction to hear the complaint were raised at any stage of the proceedings.

The Complainant is a founder member of the Respondent company. Prior to the Complainant becoming an employee of the Respondent, he worked on a project with one of the Directors. Following a series of meetings with potential clients, this project took a more formal shape with a corporate entity being created, and the Complainant joining the company payroll as a salaried employee in June 2017. At this time, the Respondent proceeded a software product that manages the governance of hedge funds. At the outset of the complaint’s employment he was charged with maintaining all the technical aspects of this product.

Shortly after commencing his employment, the Complainant encountered difficulties with one of the other founders. In particular he was concerned that the sales team were not performing and did not have adequate technical experience to sell the product to potential clients. He was also concerned when one of his support staff was dismissed. In addition to the same, the Complainant became concerned that the other founders of the company began to focus their attentions on blockchain technology and the creation of cryptocurrency. The Complainant’s concern in this regard was that such endeavours are extremely volatile, legally unsound and not in keeping with the company’s business plan.

On 21st December 2017 the Complainant signed a contract of employment. This contract described his role as that of “Chief Technical Officer”. Notwithstanding the same, the Complainant continued to express reservations about the direction the company appeared to be taking, in particular the pursuit of cryptocurrency. On 24th January 2018, the Complainant met with the other founder of the business and express his reservations. In the course of this conversation he was given comfort that this line of business was not being pursued. However, the Complainant, in his role as CTO had sight of emails contradicting what he had been informed. At this point, the Complainant felt that he was being side-lined from the business. In March of 2018, the Respondent hired the services of a PR firm to promote the ICO.

At this point, the Complainant was struggling to keep the software service active due to a lack of resources. Over the previous months that Complainant had requested additional staff to assist in this regard, however these requests were ignored. The Complainant arranged a meeting for 20th April 2018 to discuss these issues, however this meeting was cancelled with on hours’ notice. The Complainant had submitted that by May 2018, the relationship between himself and the co-founder of the company had completely broken down. A mediation conference was arranged in attempt to solve this, and other corporate, issues. The outcome of the same was the Complainant would step down as CTO but would still remain in the Respondent’s employment. The Complainant stated that following this agreement his day-to-day activities remained the same.

On October 2019, the Complainant was informed that their main client, and user of the software service, intended to cancel their contract with the Respondent. The Complainant was firmly of the view that this contract could have been saved should management of the Respondent prioritise the same. On 8th May 2020, the Complainant received an invite to a redundancy consultation meeting for 13th May. At this meeting the Complainant was informed that he was to be made redundant. The Complainant stated that following his redundancy, he understood a new CTO was hired to fulfil his role.

By submission, the Complainant stated that no redundancy situation existed at the relevant time. This is evidenced by the fact that the Respondent hired an employee to act as CTO almost immediately following his departure. The Complainant also submitted the redundancy was a cover to dismiss him due to inter-personal issues. The Complainant further submitted that the procedure adopted in effecting the redundancy was fundamentally flawed in that it did not allow for a right of representation or a right of appeal. Finally, it was submitted that the meeting of 13th May was not a consultation meeting as the Complainant was informed he be made redundant at the same.

By response, the Respondent denied that the dismissal of the Complainant was unfair and submitted that a valid redundancy exited at the relevant time.

Following the loss of a major contract, the Respondent was obligated to examine various cost saving measures to endure the ongoing viability of the business. As the Complainant’s role related to the maintenance and management of the software utilised by the terminated contract, the Respondent elected to commence a redundancy process regarding the Complainant. This decision was also informed by the fact that the Respondent intended to outsource the majority of their technical needs.

On 28th April, a board member for the Respondent invited the Complainant to a meeting regarding his future employment status. Unfortunately, the Complainant queried the validity of the appointment of his director, as a result the process was paused until an EGM could be called to resolve the issue. Following the same, a further invite to a consultation meeting was issued on 8th, proposing a meeting for 13th May. In the course of this meeting, the Director outlined the financial difficulties facing the company. The Director further outlined that the Complainant was primarily involved with the creation of a software service that was no longer in use by the Respondent’s clients. Since the requirements for the Respondent to provide the services performed by the Complainant had ceased, they could not justify his salary. At this meeting the Complainant stated that the client in question had requested that the contract be extended, but that the Respondent demonstrated no appetite to retain the contract. As no further submission or correspondence was received from the Complainant, his employment was terminated by reason of redundancy on 15th June 2020.

By submission, the Respondent denied that they had unfairly dismissed the Complainant under the guise of a sham redundancy. They submitted that many opportunities were provided to the Complainant to consult with the Respondent in relation to the redundancy process. Finally, the Respondent submitted they had taken all appropriate steps and actions in relation to the redundancy. 

Section 6(1) of the Unfair Dismissals Acts provides that,

“the dismissal of an employee shall be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.”

In a situation whereby the Respondent can demonstrate that such a redundancy is substantively and procedurally fair, they may rely on the defence afforded by Section 6(4)C of the Act, which expressly lists “redundancy” as a ground of dismissal which shall not be deemed to be unfair. In this regard, it should be noted that Section 6(6) of the Acts provides that the onus of proof in relation to “substantial grounds justifying the dismissal” lies with the Respondent. In addition to the foregoing, Section 6(7)(a) of the Act, as inserted by the Unfair Dismissals Act 1993, provides that regard should be had to,

“…the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal”.

Section 7(2) of the Redundancy Payments Acts sets out the following five definitions of redundancy,

a)      “the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

b)      the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

c)       the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

d)      the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

e)       the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained,”

The defence to the allegation of unfair dismissal advanced by the Respondent is that the sole contract for the software the Complainant created and maintained had been discontinued and, consequently, they no longer could justify the expense of his salary. While not expressly stated by the Respondent, it would appear that this situation is analogous to the definition set out in Section 7(2)(A) above.

The Complainant has alleged that his dismissal was substantively and procedurally unfair. He further submitted that the redundancy was motivated by personal factors. In the matter of St Ledger v Frontline Distributors Ireland Limited, UD 56/1994 the Employment Appeals Tribunal remarked that redundancy “has two important characteristics, namely, impersonality and change.” The Tribunal went on to state that,

“Impersonality runs throughout the five definitions in the Act. Redundancy impacts on the job and only as a consequence of the redundancy does the person involved lose his job.”

In JVC Europe Limited -v- Jerome Panisi [2011] IEHC 279 the High Court held that,

“It is made abundantly clear by legislation that redundancy, while dismissal, is not unfair. A dismissal cannot be disguised as a redundancy; that is not lawful” and,

“It may be prudent, and a mark of genuine redundancy, that alternatives to letting an employee go should be fairly examined” and,

“Following what is on the surface a fair procedure does not necessarily demonstrate that the decision maker is taking an honest approach to a decision.”

An unusual factor in this particular matter is that the Complainant is a co-founder and shareholder of the Respondent company. From his uncontested evidence in this regard, it seems that in the initial version of the company, he focused on the technical aspects of the role. It is apparent that the Complainant, almost single-handedly, developed and maintained bespoke software to assist financial institutions with regulatory compliance. It further appears that the Respondent company began to take a different direction and focus on different products by late 2019 / early 2020, much to the displeasure of the Complainant.

It is the Respondent’s case that this change led to the invocation of the redundancy procedure as regards the Complainant’s role. A number points can be made in relation to the same. Firstly, it appears that the Complainant, and the Complainant only, was considered for redundancy at this time. No other cost saving measures or alternatives to redundancy were considered at any point of the process. The Respondent is a technology company and appears committed to providing technological solutions to end users. In this regard it is inconceivable that the Respondent would not have some role for an employee of the Complainant’s talents, especially given that these skills are in short supply in the labour market. Nevertheless, no alternative employment was offered to the Complainant, with the invite letter stating that “no redeployment opportunities have been identified”. By submission, the Respondent stated that much of their technical requirements had been outsourced to third parties, reducing the need for the Complainant’s role. Taking this submission at its height, the Respondent would still require an employee to oversee and implement this outsourced work. In this regard I note that shortly following the Complainant’s departure, the Respondent hired an employee to act as CTO. This evidences the fact that the Complainant’s role was not in fact redundant and the termination of his employment was in fact a dismissal.

Regarding the procedure adopted by the Respondent, I note the Complainant was not permitted any right of representation at the redundancy meeting. Given the unusual nature of the Complainant’s role, this cannot be said to be reasonable in the circumstances. In the matter of Tolerance Technologies Limited –v- Joe Foran UDD1638, the Labour Court held that a failure to allow adequate representation during consultation meetings constituted a procedural flaw. Finally, I note the dismissal letter did not provide for an appeal of the termination. In the matter pf Cuan Tamhnaigh Teoranta -v- Declan McShane UDD224, the Labour Court likewise found that a failure to provide a right of appeal characterises a defective procedure in this regard.

Having regard to the accumulation of the foregoing points, I find that the Complainant’s dismissal was procedurally and substantively unfair. As a consequence of the same, his complaint is well-founded and his application succeeds.

CA-00038728-001 – Complaint under the Unfair Dismissals Acts

I find that the Complainant was unfairly dismissed within the definition of the Acts and consequently I find that his application is well-founded.

In relation to redress, Section 7(1) empowers me to order re-instatement, re-engagement or a payment of compensation to be made to a successful Complainant under the Act. Given that neither party wished for the employment relationship to recommence, compensation is the most appropriate redress in this circumstance.

In calculating such compensation, regard must be had to the Complainant’s attempts to mitigate his losses following his dismissal. In this regard I note that the Complainant’s skill set is highly sought after and in demand, even during the period of reduced economic activity arsing from the restrictions arising from the Covid-19 pandemic. Having regard to the same, it would be reasonable to expect that the Complainant would be in position to secure alternative employment shortly after his dismissal. Regarding the mitigation of his losses the Complainant stated that following his dismissal he worked on some new projects. No evidence was presented of the Complainant’s effort to secure new employment following his dismissal. In light of the foregoing, I find that the Complainant has failed to mitigate his losses following the dismissal as required by the Act.

Section 7(1)C(ii), as inserted by the Unfair Dismissals Act 1993, empowers me to award compensation not exceeding four weeks remuneration in such circumstances. Having regard to the totality of the evidence presented, I award the Complainant the sum of €5,384.31, or the equivalent of four week’s remuneration, in compensation.

CA-00041552-001 – Complaint under the Organisation of Working Time Act

On his complaint form dated 15th December 2020, the Complainant alleged that he never received compensation for untaken annual leave on the termination of his employment. Having examined the Complainant’s final payslip, I find that this is the case.

In the matter of Waterford County Council v O’DonoghueDWT0963, the Labour Court stated that,

“The only leave year which is cognisable for the purpose of determining if an employee received his or her statutory entitlement is that prescribed by the Act itself, that is to say a year starting on 1st April and ending on 31st March the following year. While different arrangements may be put in place for administrative purposes, in determining if a contravention of the Act occurred that Court can only have regard to the leave allocated to an employee in the statutory period.”

In the present case, the Complainant last day of employment was 15th June 2020. From 1st April to 15th June, the Complainant would have accrued just over four days of annual leave on the termination of his employment. In circumstances whereby the Complainant’ weekly payment was €1,346, I calculate the value of the same at €1,076.80.

Section 27 of the Organisation of Working Time Act 1997 (as amended) empowers me to do one or more of the following:

1.Declare the complaint was or was not well founded;

2.Require the Employer to comply with the relevant provision;

3.Require the employer to pay to the employee compensation of such amount as is just and equitable having regard to all the circumstances but not exceeding 2 years remuneration.

Having regard to the foregoing, I find the complaint is well-founded. Regarding redress, I find that the Respondent the sum of €2,576.80. This sum is comprised of €1,076.80 unpaid holiday entitlement, and a further €1,500 in compensation.

Redundancy, Founder, Alternative Employment